Paul Krugman: Too Little, Gone Too Soon: Noted for August 31, 2013
Paul Krugman: Too Little, Gone Too Soon:
One of the things you always heard, back when we were actually talking about stimulus rather than fighting a rearguard action against destructive austerity, was the claim that stimulus spending would inevitably end up becoming a permanent fixture of the economy. This was always said with an air of worldly wisdom--of course that’s how these things work!--even though history said very much the opposite. But anyway, the invaluable FRED now has a series on exactly that subject…. So next time someone goes on about how we had this huge stimulus that failed, you can tell him that the “huge” stimulus--in response to the worst financial crisis in three generations--peaked at a whopping 1.6 percent of GDP, and was effectively gone in a bit over two years.
Cf. to the CE's start-of-2009 judgment that the economy needed a 4% of GDP stimulus for three years…
